H1B Visa

Trump effect: Infosys looks to play safe in US via local hiring

INDIA-ECONOMY-IT-INFOSYS [File photo] Infosys has around 20,000 employees in the US, of which more than 50% are on H1B visas

The company wants to protect itself from any uncertainties with regard to H1B visas

IT services major Infosys, which on Tuesday announced its plans to hire 10,000 American workers and open four new technology centres in the US, aims to safeguard its interests there, while highlighting the fact that it is creating jobs in the North American country. 

With this move the company also looks to protect itself from any uncertainties with regard to the H1B visas, which may come up in the near future. Though people on H1B visas work on a lesser salary and are flexible to shifting locations in the US, Infosys will not only need to pay the local American workers more, but will also need to re-skill some of them if required. 

Experts say currently the company has around 20,000 employees in the US, of which more than 50 per cent are on H1B visas, while the rest are local American workers. “Currently, the wage difference between an H1B visa holder and local American worker is not much. An H1B visa holder draws close to $70,000-80,000 annually, whereas an American worker draws around $95,000 to $100,000. Plus, the company also has to incur charges on the H1B visas every three years, which comes between $8,000-10,000, including legal and processing charges. If we look closely at the wage difference, it is around 16 to 20 per cent between an H1B visa holder and a local American worker. I broadly feel that it may not make much of a difference for Infosys as it needs to keep a firm foothold in the American market from where majority of its revenues come in,” said Amit Chandra, IT analyst at Mumbai-based HDFC Securities. 

As far as setting up of local technology centres in the US is concerned, experts say though it is a costly affair, it is also a business requirement for the company as it is working on many digital transformation projects that require proximity to the clients in the US. “Many of the new contracts which Infosys has are short-time, three to four-year digital transformation contracts, which require increasing onsite presence on part of Infosys. More face-to-face interactions with their clients is required for digital contracts and these centres will fulfill those requirements. The affect of all these expenditures on Infosys will be visible over the next few quarters, as earlier Infosys was successful in getting high margins but its average margins are likely to come down to around 25 per cent,” added Chandra.

On the other hand, experts such as Kris Lakshmikanth of recruiting firm Head Hunters India Limited feel the cost of hiring an American worker equals to almost four workers in India. “On an average, a person with the same capability in the US will be available for an average salary of around Rs 52 lakh per annum, around $83,000-85,000. Whereas, in India, a person with the same capability will be paid around Rs 12-15 lakh per annum. It is very clear that Infosys does not have any choice as the pressure to hire local people is coming not only from the US but in other countries such as Australia, the UK and even West Asia. In order to survive in the US market, Infosys needs to show that it is creating jobs in the local market even if it comes at a high cost,” said Lakshmikanth. 

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